Bulls face hurdle at the 5440 level

Last week witnessed a choppy trading pattern as the bulls and bears slugged it out for control.

The benchmark indices gained over the previous week, but remained below their 2010 highs. The gains were prominent in the banking and mid-cap stocks, whereas the technology stocks lost ground on profit sales.

The weekly BSE and NSE combined advance-decline ratio stood at 11372:9770. The capitalisation of the breadth was negative as the commensurate figures were Rs 41,836 crore:Rs 48,914 crore. The NSE gained Rs 4,270 crore in market capitalisation over the previous week.

Foreign institutional investors (FIIs) were net investors to the tune of Rs 1,569.30 crore during the week and that saw the rupee close the week at 44.52 vis-a-vis the dollar (against the previous week’s 44.33/$ level).

The US markets saw the Dow Jones Industrial Average, Nasdaq Composite and S&P500 log new 2010 highs. These are bullish portends for domestic markets as they will provide positive cues. The UK’s FTSE was a loser and the Asian region saw the big four — Hong Kong, Singapore, Japan and China — lose ground as profit sales exerted downward pressure on these markets.

The Asian indices may be a wild card this week as any sustained decline in these markets may exert bearish pressure on domestic markets. Should these markets be flat to positive, domestic markets may rally.

Technically, the domestic indices have shown consolidation as the recent highs remain inviolate and the lower levels attracted buying support. The weekly range advocated between the 5475/ 5150 has held as the Nifty bounced from the 5160 levels.

This week is likely to wit-ness a range of 5440 on the
upsides and the 5050 levels on declines. Traders may note that the 5440 level is a stiff short term resistance for the coming weeks. Only a sustained trade above this threshold will trigger a fresh uptrend.
Traders are advised to cut back on their exposure levels on fresh trades till a conclusive breakout occurs.